Auto leasing, temporarily crippled by the credit and financial crisis, is making a comeback this fall. Business isn't nearly back to where it was before the crunch hit, when leases made up about 20 percent of all car transactions. But it is trending upward after hitting a high for the year of 12.8 percent in October, up from a bottom of 7.2 percent in August, according to automotive information site Edmunds.com.
Does leasing make any more, or less, sense financially than it did before the crisis?
Finding an attractive deal is tougher now, and you'll need good credit to get one at all. Beyond that, the discounts and other incentives long used to make leases more appealing aren't nearly as plentiful.
Otherwise, the pros and cons remain about the same as before.
Leasing can give you lower monthly payments than if you purchased the same car. Or for a similar monthly payment, you can drive a much better vehicle. Problems with the car you leased? The manufacturer's three-year new car warranty should protect you. For that reason, it's advisable to have a lease term of no more than three years.
But it really only makes financial sense to lease if you change cars frequently and can take a tax break for driving for business purposes.
Monthly payments don't stop when you lease. If you buy, on the other hand, you could enjoy years of no payments once a five-year car loan is paid off. And you will own a vehicle that may be worth $15,000 or more.
The question to ask yourself is how much value you place on having only new automobiles.
What can I do to improve my chances of finding a good leasing deal?
First of all, watch closely for better price offers as the comeback continues and carmakers try to recoup business now that the sales surge from the Cash for Clunkers rebate program is over.
A list of incentives and rebates by region is available at Edmunds.com. If you have decided you want a lease, review what's available, look at the terms to make sure it's active in your area and verify with the dealership's financial arm that you qualify.
Also, check your credit report in advance. There may be problems that could cost you a good lease and can be fixed easily. For example, perhaps you moved and a bill went to your old address that you weren't able to pay on time.
If you're not pursuing a specific incentive, try contacting four or five dealerships in your area for quotes. Tell them what vehicle you want to drive, how many miles a year you intend to drive it and how long a lease you want.
Check the information site LeaseCompare.com for more information.
You may also want to consider taking over someone else's lease. Check what's available at LeaseTrader.com or Swap alease.com, popular sites that act as matchmakers between buyers and sellers.